Bangkok Bank term rates

[elgordo38]

I went to Bangkok bank to check the term rates and it looks like their leaning towards a rate cut. 7 months term was 2.50% and 4 months term was 2.75%. Any comments or ideas. The last central bank meeting held the rate steady at 2% Looks like the Bank of Thailand is going to start pushing rates down this year like so many other world wide banks have been doing. I would take this as pushing down the value of the baht in the future to protect exports and tourism as tourists must exchange their weakening currencies into bahts to spend here. Foreign employers would also get more bahts to pay their employees. Could this be a turning point in the value of the baht?

[Rooo]

Moved to Banking Forum.

[AyG]

Far better to look at the government bond yield curve to see what the market thinks is going to happen.

See http://www.thaibma.or.th/compositerpt/GovYieldCurve.aspx

[scooterboy]

^ Errm...is that a yes or no ?

[Sophon]

The two accounts you refer to are not really directly comparable. The minimum deposit for the 7 month 2.50% p.a. account is 200,000 baht, while the minimum deposit to achieve the 2.75% p.a. you quote for the 4 month fixed deposit is 100 million baht. For deposits of less then 50 million the interest rate is 2.00% p.a.

Sophon

[Gecko123]

The two accounts you refer to are not really directly comparable. The minimum deposit for the 7 month 2.50% p.a. account is 200,000 baht, while the minimum deposit to achieve the 2.75% p.a. you quote for the 4 month fixed deposit is 100 million baht. For deposits of less then 50 million the interest rate is 2.00% p.a.

BB Fixed deposit.jpg

Sophon

You are quite correct about the apples to apples comparison.

But the OP's basic question about why BB is offering higher interest rates for short term 4 and 7 month deposits is still valid. In order to otherwise get a 2% return you have to move out to a 36 month term.

I have always wondered whether BB might be doing this because it has some need to do so for internal cash flow purposes or just to manage its duration risk, but I am increasingly of the opinion that the real reason they are incentivizing people to chase these yields in shorter term deposits is because they suspect that longer term rates are headed down.

Given that every Tom, Dick and Harry central bank across the globe is pursuing quantitative easing and practicing "race to the bottom" currency weakening strategies, it's probably not rocket science to think that Thailand might be cutting interest rates further in the not so distant future, especially since the economy has been slowing considerably as of late.

[Pib]

Bangkok Bank and other Thai banks have been offering high rate promotions for years for short and long terms...even before the Bank of Thailand and other national banks started cutting rates.

I expect the simple reason they sometimes (and quite often) offer higher than normal rates for short terms fixed accounts is purely because some people don't want to tie up their money for a long period in a fixed account say of 9 to 12 months or more, but less than 9 months is fine. So, in order to get those customers the bank offers promotional rates off various time lengths.

Heck, so far over the years, I've had a 5, 7, 11, and 15 month term fixed accounts with Bangkok Bank...and I'm currently in my 2nd 11 month fixed account paying 2.8% simply because I thought it was the best deal at the time when I entered it a few months ago and I don't mind having my money in a fixed account for 11 months. But that's just me; other folks may not want to do a 11 month month term...maybe they want a shorter term...to each his own. In my case the reason I pick a certain term length is simply because it's paying the highest rate when it's time to roll my money over from a matured fixed account as I use this money only for my yearly retirement extension of stay and emergency money if every needed...it's not used or needed for my day-to-day living expenses.

Yea, I think it's purely the banks offering various fixed deposit lengths at promotional rates that will appeal to different people...like people who don't want to tie their money up too long...say maybe only a half year or so.

[worgeordie]

The two accounts you refer to are not really directly comparable. The minimum deposit for the 7 month 2.50% p.a. account is 200,000 baht, while the minimum deposit to achieve the 2.75% p.a. you quote for the 4 month fixed deposit is 100 million baht. For deposits of less then 50 million the interest rate is 2.00% p.a.

BB Fixed deposit.jpg

Sophon

The 100 Million and 50 Million rates must be for politicians,Military Hi So,and their ilk.

regards worgeordie

[Sophon]

The two accounts you refer to are not really directly comparable. The minimum deposit for the 7 month 2.50% p.a. account is 200,000 baht, while the minimum deposit to achieve the 2.75% p.a. you quote for the 4 month fixed deposit is 100 million baht. For deposits of less then 50 million the interest rate is 2.00% p.a.

BB Fixed deposit.jpg

Sophon

You are quite correct about the apples to apples comparison.

But the OP's basic question about why BB is offering higher interest rates for short term 4 and 7 month deposits is still valid. In order to otherwise get a 2% return you have to move out to a 36 month term.

I have always wondered whether BB might be doing this because it has some need to do so for internal cash flow purposes or just to manage its duration risk, but I am increasingly of the opinion that the real reason they are incentivizing people to chase these yields in shorter term deposits is because they suspect that longer term rates are headed down.

Given that every Tom, Dick and Harry central bank across the globe is pursuing quantitative easing and practicing "race to the bottom" currency weakening strategies, it's probably not rocket science to think that Thailand might be cutting interest rates further in the not so distant future, especially since the economy has been slowing considerably as of late.

For the last several years Bangkok Bank along with just about all other Thai banks have been offering higher interest rates on their special offerings than what is available on standard fixed deposits (even those with longer terms). So I don't think we can read too much into the fact that Bangkok Bank is offering higher interest on their 4 and 7 month promotions than on e.g. their 12 month standard fixed deposit. My current 11 month fixed deposit also has a higher interest rate than what BB were offering on 12 or 24 months deposits when I opened it. It does seem though, that Bangkok Bank is moving towards shorter terms on their special offerings.

However, my reply was directed at the point/question in the original post, which I think was that Bangkok Bank is possibly expecting significant cuts in interest rates in the near future since they are offering a higher interest rate on a 4 month fixed deposit compared to that on their 7 month fixed deposit. That is not really the case though, they are just offering higher interest for bigger deposits, which is quite normal. But I could have misread what it was the OP meant to say.

Sophon

Edited February 6, 2015 by Sophon